How Much Should You Actually Have in Emergency Funds?

(SPOT.ph) The pandemic is proof you can never really predict what's going to happen. Unexpected mishaps can surface at any time and money pros often point to the magical emergency fund to get you out of a tight spot. It's easy to think of this as your main savings account, but it's actually a separate contingency fund for when life throws you a curveball. But how much should you save up for it anyway?

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Emergency funds should have your back

There's no hard and fast rule, but the ideal amount should be enough to cover three to six months of your monthly expenses. It differs per person, but these monthly spends include utilities, transportation, food, rent, and anything else you'll need to keep you alive at least.

For example; if you spend P30,000 a month—bare-bones essential, running purely on needs—you should strive to have an emergency fund of at least P90,000. Maximum safety would be at P180,000. To illustrate better, emergency funds are often drained out to survive typhoon damage or relocation, emergency operation, or an unexpected family accidents.

If you've got money goals already, add saving up for an emergency fund. And if you don't have a savings plans yet, "start building an emergency fund that will help cover any unexpected expenses in the future,"  financial consultant Aivan Parducho said. The best time to start saving was yesterday but the second best time to start is now.

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How do you start saving?

Untouched, secure, and liquid, the emergency fund should be readily available for withdrawal should catastrophe strike. Think of it as a stricter savings account. Here's to hoping we won't get a new pandemic virus so soon, but it pays to err on the side of caution, especially when money's involved.

"Set a separate account for your savings and monthly expenses, pagdating ng sweldo ilipat na agad ang ipon mo for the month sa savings account mo para nakahiwalay na sa pera panggastos for monthly expenses. Doing this would ensure that you get to save money every month," Parducho said.

It sounds like a big ask, but Parducho said you can start small by "saving at least 10% of your income" per month.